Northern light.

A symbol of the city’s rebirth.

That Iceland’s capital is back on its feet borders on the miraculous. Artists and the creative set led the way in the city’s astounding recovery. An encounter with some of the world’s most original crisis managers.

High above the harbour, Víkingur Ólafsson crouches atop the gleaming façade of the Harpa concert hall, savouring the ocean air. Down below is a three-masted sailing ship, a coast guard vessel and several fishing boats. The 31-year-old pianist surveys his hometown with satisfaction. Last night, the Midsummer Festival – of which he has been artistic director for the last three years – ended with a sold-out chamber concert. Not only was it a further milestone in the musician’s triumphant career, but it also exemplifies the path that the world’s northernmost capital city has struck: away from misery and back towards normality. In the fall of 2008, the country’s banking system collapsed, prompting the government’s intervention and subsequent bankruptcy. The decision nevertheless to finish the half-built concert hall was fraught with controversy. Its ultimate completion says a lot about Icelanders: few things are as precious to them as art and culture. “The Harpa concert hall has since come to symbolize the city’s rebirth,” says Ólafsson, who also happened to be on the keyboard at the inaugural concert in 2011.

Ray of hope: Reykjavík’s harbour seen through the window of the concert hall.

A symbol of the capital’s burgeoning self-confidence.

The building with its sparkling glass façade has become a modern landmark – and a symbol of the capital’s burgeoning self-confidence. Though situated far off the beaten track and with a population of just 120,000, Reykjavík more than makes up for it with sheer guts and creative potential. Ólafsson is firmly ensconced among the creative set that are making their mark on the city – despite his tendency to deflect attention toward others: “Björk and bands like Sigur Ros have done more for our country’s image that any politician ever has.”

Indeed, there are few places where politics and art are so closely intertwined as in Reykjavík. In 2010, with the city mired in crisis, a man was elected mayor who wouldn’t have stood a chance anywhere else. Jón Gnarr, born in 1967, had learning difficulties growing up, was a punk rocker, anarchist and comedian before he and his friends decided to form the “Best Party”. Spouting nonsensical slogans like “sustainable transparency”, he managed to win the election. While elsewhere in the world, crises see angry citizens taking to the streets and embracing radical ideas, Reykjavík’s residents responded by installing an offbeat artist in city hall.

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Vista: Panorama from the Hallgrimskírkja.

The “Best Party”.

“The ‘Best Party’ was an inspiration to people everywhere,” maintains Gnarr, who held office from 2010 to 2014. His group reformed schools and rescued the city’s ailing utility company. His administration may have lacked a well-defined political agenda, but there was plenty of black humour, off-the-wall ideas and a willingness to listen to citizens’ concerns. Today, Gnarr remains in demand around the world, and is often asked to read from his books and discuss his country’s political experiment. “People are constantly asking me for advice,” the bomber-jacket-clad Gnarr says with a sigh. “The thing is, I don’t have any to give them.” In contemplative mood, he strolls through his city’s ancient cemetery, filled with mosses, ferns and gnarled trees. “What a peaceful place this is,” remarks Gnarr.

A little further on, he stoops to pick up a small plastic bag from the ground. “Even the drug dealers like it here,” he grins. Such is Gnarr’s popularity that he could have easily been re-elected mayor or even president of the country. But his mind is made up: “It would have just ended up being horribly boring. And I wanted to show people that power doesn’t automatically corrupt.” Author Sigurjón Sigurðsson is another example of how committed Reykjavík’s creative set are to their hometown. The 52-year-old also belonged to the “Best Party”. “We crusty old anarchists took over the city and accomplished what we set out to do, as we did when we were running galleries and record labels,” he says.

“Reykjavík might be a small city”.

Sjón, as he calls himself, is one of the country’s most successful authors, has written lyrics for Björk and worked with Lars von Trier. “Reykjavík might be a small city,” he says, “but Icelanders have never been isolationists. We have always absorbed foreign influences and used them to do our own thing.” Sjón’s novels tell of an island which insists on interacting with the rest of the world despite its secluded location. In fact, that’s the way things really are: nearly everyone in the city speaks good English, and skyscrapers reach skywards just like anyplace else. Even so, there are more local peculiarities on display here than on the mainland. “Let’s face it – Reykjavík isn’t all that pretty,” says Sjón with as much affection as such a statement could possibly allow. His fondness for the corrugated iron buildings, overgrown gardens, graffiti-covered back lots and old-fashioned cafes of his hometown is palpable. Near the harbour, where fishermen used to dock their boats full of herring and cod, designer Steinunn Sigurðardóttir has set up shop. She moved her boutique and studio next to the water to escape the endless stream of tourists marching through the city’s main shopping promenade.

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Escape the city: Iceland’s famed wilderness starts just outside Reykjavík, like here along the road to Þríhnúkagígur volcano.

Warmth and inspiration.

Her knitwear is now displayed in a white room that used to house a fish factory. “Ten years ago I could have moved to New York or Italy,” she says, “but I didn’t want to get swallowed up by the fashion industry.” Reykjavík offers the designer, who used to work for La Perla and Calvin Klein, some coveted peace. Her knitwear reflects a deep affection for handicraft traditions, while her mostly black or gray jackets, dresses and sweaters, hats and coats all share a beauty as timeless as a view of the Atlantic.

“Reykjavík might not have a Prada store, but it has a very large community of painters, sculptors and musicians,” says Steinunn. She hopes to give back to her wintry homeland a bit of what she’s always managed to find here: warmth and inspiration. No need to worry about Reykjavík, then. Not as long as the city has people like Steinunn, Sjón, Jón and Víkingur to rely on.

Plainly captivating.

The restaurant that is likely Iceland’s best is housed in an unadorned room with barn-like dimensions and seating for 24 guests at most – the atmosphere of Dill seems purposely designed to be the exact opposite of a traditional temple of gourmet dining. Head chef Gunnar Karl Gíslason hails from the northern part of the island, is called Gunni by his friends and describes himself as a “boy from the country”. In his cookbook North, he memorializes the farmers and fishermen he grew up with. The master chef uses ancient techniques of food preservation for his own unique purposes: fish is dried and grated up, lamb gets smoked and marinated herring is frozen into ice cream. Depending on the time of year, as much as 95 percent of his ingredients are sourced in Iceland, right down to the salt that the chef gets produced especially for the restaurant. Using geothermal energy, of course. Gunni isn’t a big fan of flowery phrases; he prefers to describe his dishes in more laconic terms like “beetroot – liver – roasted yeast” or “monkfish, sweet and sour glaze – lamb – angelica – celeriac”. All signs of simplicity vanish, however, once his food hits your palate.

Whale, anyone?

Not too long ago, according to Hrefna Rósa Sætran, “the only tuna that most Icelanders were acquainted with came from a can. Reykjavík’s culinary scene has drastically changed over the last ten years, though.” The 27-year-old head chef runs two large restaurants in the capital that can accommodate a total of 500 guests between them. At Fish Market diners enjoy an unobstructed view of the open kitchen, where meat and fish are seared over a Japanese-style Robata grill at 1,200°C (2,200°F). While the traditionsteeped natives may relish the exoticness of tuna, sushi and Asian spices, tourists go gaga over typical Icelandic fare like Arctic char, smoked minke whale and Atlantic puffin. For the faint of heart, the proprietress offers words of encouragement: “My first name means minke whale. I’m very fond of whales, and you can be sure that these creatures are only fished in accordance with very strict regulations.”

Just desserts.

Fans of sophisticated desserts are in good hands with Axel Þorsteinsson. The pastry chef began baking at age 15 under the watchful eye of his mother. He went to Denmark to train, came top of his class and even received a medal of honour from the Queen. Axel devises sweet confections that play with fruity aromas and combine opposing consistencies ranging from crispy to creamy. His macaroons, salted peanut butter cookies, and lime cake with matcha crème and white chocolate are particularly popular. His delicacies feature prominently on the menu – and are also available to take away – at the upscale Apotek grill and restaurant in the building that houses the hotel of the same name.

Sleep is the best medicine.

Accommodations in Reykjavík don’t get much more central than the Hotel Apotek. Built in 1917 from plans drawn up by Guðjón Samúelsson, it was originally the city’s main pharmacy. These days, though, the kitchen is the only place for mixing healthful concoctions. During the art deco building’s remodel, builders were forbidden to knock down any walls and as a result, the 4-star hotel is blessed with 45 elegant rooms featuring unique layouts and contemporary furnishings in hues of gray and brown. Take the stairs for views of Guðmundur Einarsson’s whimsical sculptures resting in their niches. The hotel’s unquestionable highlight, though, is its three-story tower suite.

On the go.

Ah wilderness!

Just beyond Reykjavík’s city limits begins Iceland’s storied wilderness, parts of which look positively otherworldly. One of the most scenic hikes available in the capital’s environs is the route through Reykjadalur (Valley of Smoke). Starting just past the town of Hveragerði (go through the town centre, past the soccer field and along a gravel path to the trailhead parking lot), the trail leads upwards into a green valley with seething mud pits and fantastically multicoloured rocks. Fed by natural hot springs, the creek is warm enough to swim in. Be careful though: some sections are hot enough to scald.

Travel tips.

Image gallery.

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Get high: The gray-white Hallgrímskirkja towers over the city like a snow-covered mountain peak. State architect Guðjón Samúelsson designed the expressionist-style façade, with construction taking place from 1945 to 1986.

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Homegrown sounds: Blame Björk for igniting the love affair between hipsters all over the world and Reykjavík. Starting in 1993, her global success opened the eyes of millions to an Iceland teeming with artists, designers and pop bands. Today, avant-garde pop music is one of the country’s main exports.

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Crab cakes: Icelanders worship their country’s fast food, and with good reason. Down at the harbour, in a trailer parked on the wharf, Sunna Dís Ægisdóttir prepares deep-fried crab cakes.

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The beauty of the abyss: 30 minutes south of the city, an open gondola takes you into the bowels of the Earth, descending 120 meters (400 ft) into the magma chamber of the Þríhnúkagígur volcano, which has lain dormant for 4,000 years.

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Hot and cold: At 15 degrees (60˚F), the water lapping at the shores of Nauthólsvik Beach is a comfortable temperature for swimming, or at least it is if you stay within the small basin that is naturally heated by thermal springs.

Good to know.

Forget the cash.

You’ll hardly ever need coins and bills in Iceland. Whether it’s a parking meter, the swimming pool or the theatre box office – you can pay everywhere using a credit or debit card. 1,350 Icelandic krona is equivalent to about ten dollars.

Cleanliness.

Iceland’s public pools are open to all, as long as you’ve had a good scrub before you get in. Many Icelanders pay a daily visit to one of the island nation’s 129 public pools, and are sticklers about cleanliness. No need to feel bashful in the shower though; everyone soaps up naked.

Thorougly gripping.

Bloody and filled with lots of nastiness, Icelandic mythology gives even Game of Thrones a run for its money. The tales are marvellous, but they can be confusing for first-timers. It’s probably best not to even try and figure out who exactly Thorolf, Thorgerd, Thorberg, Thorir, Thorgeir, Thorgunna or Bardi the Slayer all were.

Close to the Earth.

Natural disasters are a key issue on a volcanic island. Yet despite the frequent eruptions, floods, earthquakes and storms, Icelanders seem positively enchanted by their motherland’s mood swings. You can buy disaster-themed postcards, watch movies about lava explosions and heatedly discuss what it was like when Eyjafjallajökull erupted.

Slow down.

Important note for anyone planning on driving: even on the best highways, never exceed 90 km/h (55 mph). The fines for speeding are stiff, and the police have the latest technology at their disposal.